The interim budget is out with a mixed bag for industries in the region. The textile industry has shown some level of satisfaction with the measures announced in the budget. While, the small scale industries are disappointment.

According to A Sakthivel, president, Tirupur Exporters' Association, one of the positive measure is the reduction of excise duty from 12% to 10% for all capital goods as there has been a slowdown in the investment of knitwear export sector. The reduction in excise duty from 12% to 10% for all goods falling under Chapter 84 and 85 of the Schedule to the Central Excise Tariff Act for the period up to June 30.

Another positive measure announced which will help export units to meet their original financial plan and ease financial stress is the increased budget allocation for technology up-gradation fund scheme (TUFS) from 1956.16cr to 2300cr, has been welcomed by the industry. The Garment exporters have however urged the Finance Minister to release funds pertaining to benefits availed under duty drawback scheme.

However, the Policymakers feel there is a pressing need to provide relief to the textile industry, which has a significant presence in finance minister P. Chidambaram’s home state Tamil Nadu.

The global economic recession has shrunk the demand for textiles. While low-cost competitors such as Bangladesh and Vietnam are ahead of India, around 383 textile mills here have shut shop with more than half of them in Tamil Nadu.

Further, in December last year, the European Union said that it would allow Pakistan to export textile at zero duty, a privilege also enjoyed by Bangladesh. This means Indian textile will face over 9 per cent tax in Europe compared with Pakistan’s zero duty.

The textile ministry is believed to have sought a 5-per-cent duty drawback on exports to partially offset the duty advantage enjoyed by the two neighbours.